A big debate continues with long standing regulatory bodies ARLA (the association of residential letting agents) and Grant Shapps the current housing minister over whether letting agents should be regulated by government or not.
Once again the Housing minister has refused to implement any kind of regulations into the private rented sector which is a big blow for regulatory Bodies that are campaigning for tighter regulation.
What the regulatory bodies are campaigning for is an equal playing ground amongst agents, as currently there is no requirement for lettings agents or landlords to be in any way qualified or to prove themselves adequate to become a landlord or agent. This means that their professionalism is sometimes questionable and in some cases completely illegal, which is bad for the industry as a whole and unsafe for landlords and tenants that may fall into the trap of an unscrupulous agent.
Currently anyone can set up as a letting agent without any qualifications straight away without any legality preventing them from doing so. Letting agents create legal agreements on behalf of their clients and offer advice to unknowing landlords & tenants without the need for any legal training, which is dangerous. Letting agents also collect money from tenants on behalf of their landlord clients and due to this they can be having millions of pounds every year going through their bank accounts without there being any need for them to run client accounts or have their accounts audited.
Unfortunately the majority of the general public seem unaware of this and assume that if you are running a letting agent then you must know what you are doing and be qualified and that they will be protected somehow if the agent was to go under, but unfortunately this is not the case, which many un-savvy landlords have found out to their peril.
We live in a safe world in the UK we expect the government to protect us, and for there to be laws in place for when things go wrong, and in the Lettings industry this is definitely expected but unfortunately lacking
In our town we had a local letting agent that collected 9 months worth of rent from the tenant and failed to pass this on to the overseas landlord, they also failed to act on a maintenance order from the council that they received on behalf of the landlord, which resulted in the landlord almost being repossessed. She had chosen the agent because they were “close” to the property and she thought therefore that they could “keep an eye on it” also they were 1% cheaper than the local ARLA licensed agent. The landlord could not believe that she was so unprotected and that there was very little she could do about the situation.
On a regular basis we come across agents nationwide that fail to renew gas certificates, these are a legal requirement, and for a landlord to fail to be able to produce a current gas certificate can result in a jail sentence and/or a £5000 fine for the owner, and yet this is very common administrative error amongst unregulated and uneducated agents, and yet landlords will still choose them due to their perceived “low cost”.
Time and time again we are finding agents that fail to get tenancy agreements signed, fail to provide inventories, and some that have huge arrears problems, due to not being switched on to getting their landlords money in on time, all this carries a huge burden of cost to the landlord.
At the moment a buzz word in the industry is “Client Money Protection”, this is where an agent will have a type of bonding insurance to ensure that in the event of them going bust or failing to keep proper client accounts, the landlord and tenant is protected and guaranteed their money back. There are various schemes out there but it would appear that the most robust and inclusive one on the market currently is the NFOPP or ARLA client money protection indemnity cover.
In the absence of the government backing proposals to “Regulate” the lettings industry, we must rely on self regulation and there are a few schemes about. ARLA has operated a self regulated scheme and now has created the “Licensed agent” operation, but this in itself has carried lots of confusion. Any agent that carries the ARLA “Licensed Agent” logo, you can be assured has Client Money Protection, is suitably qualified to carry out lettings compliantly and they will also be having their Client accounts audited regularly to make sure they haven’t spent clients money too. However if they merely carry the ARLA logo, then you will need to check with them as this may merely mean that someone in their office is qualified. There are also similar schemes available through the RICS and NALS
So the lesson here is; no matter which agent you choose, do your research, ensure they have client money protection, AND are qualified to do what they do, as you are responsible for protecting yourself, until the government are prepared to step in and offer some form of centralised regulation, things are unlikely to get any better.